IBR Paye RePaye Refi

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Benefits of REPAYE Plan

The REPAYE Plan enables 5 million more Direct Loan borrowers to cap their monthly student loan payment amount at 10 percent of monthly discretionary income, without regard to when the borrower first obtained the loans. The REPAYE Plan improves upon the current Pay As You Earn Plan while extending its protections to all student borrowers with Direct Loans.

In addition to the monthly payment cap, REPAYE will forgive remaining debt after 20 years for those who borrowed only for undergraduate study and 25 years for those who borrowed for graduate study. 

The REPAYE Plan also will provide a new interest subsidy benefit to prevent ballooning loan balances for those whose income-driven payments cannot keep up with accruing interest.

Cons of REPAYE vs. IBR or PAYE

  1. REPAYE will count your spousal income for payment requirement regardless how you file (where as IBR/PAYE don’t count your spousal income if you MFS, married filing separately.)
  2. REPAYE does not have a payment cap (where as IBR/PAYE cap your monthly required payment at 10 year standard payment on the loan amount you entered IDR with.) This means for those going for PSLF, you pontentially will pay back more on REPAYE compared to PAYE/IBR after training/lower income years.
  3. If you are currently in IBR/PAYE, to switch to REPAYE, you will be entered into 10 year standard repaymen plan first, then make at least one payment, before you can elect REPAYE. Plus, your interest accumulated under IBR/PAYE will capitalize when you leave IBR or PAYE.

Learn More About REPAYE and Other Income-based Plans

The REPAYE Plan became available to borrowers on December 17, 2015.

For more information on REPAYE, read the Department of Education’s REPAYE Plan press release and REPAYE Plan blog post.

Interested in learning more about income-based repayment options? Visit StudentAid.gov/idr or contact your federal student loan servicer.

Borrowers can apply for REPAYE—or any other income-driven repayment plan—on StudentLoans.gov.


If you like this article, you might enjoy other DWM articles on Personal Finance, Investing, Retirement, Practice Management, & Lifestyle.

All articles by DWM are for informational purposes only and not intended as a substitute for professional advice. Please consult a professional accountant, financial adviser or lawyer, before making financial decisions.

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